Balderton Capital, a leading European venture capital firm, has raised $1.3 billion for investments in start-ups on the continent, highlighting the growing attractiveness of the European technology landscape. The London-based investor, which has already supported companies like artificial intelligence start-up Wayve and the developer of Royal Match, Dream Games, closed an early-stage fund of $615 million and a growth fund of $685 million. This development reflects the increasing interest in European technology, according to Bernard Liautaud, Managing Partner at Balderton.
Liautaud referenced data from Invest Europe and Cambridge Associates which show that European venture capital funds have outperformed their North American counterparts over 10- and 15-year periods. "There is a much larger roster of global market leaders coming from Europe, and we have many of them in our portfolio," said Liautaud.
The Balderton fund comes at a time when several leading European VC firms, including Accel, Index Ventures, and Creandum, have raised new capital. According to Dealroom, a platform for analyzing private technology investments, VC investment in Europe increased by 12 percent in the second quarter of 2024 compared to the previous year.
Balderton, which invested in early funding rounds of Revolut and thus became the largest investor in the fintech company, noted that Revolut recently announced the launch of an employee stock sale at a valuation of 45 billion USD, making it the most valuable startup in Europe. Liautaud emphasized that a good track record requires consistent performance but sometimes also brings exceptional returns.
While other major European VC firms like Index Ventures and Atomico also invest in US companies, Balderton focuses exclusively on European startups. However, this strategy has meant that the firm largely missed out on the recent wave of "fundamental" AI startups in Silicon Valley, even though European AI startups like Mistral, Poolside AI, and Wayve have grown significantly in recent years.
Investments in generative AI have increased in Europe, with the share of VC funding for AI startups rising to 18 percent. However, Silicon Valley continues to dominate, with U.S. investors like Andreessen Horowitz, Sequoia Capital, and Lightspeed Venture Partners among the top investors in generative AI, bolstering their presence in Europe through new offices in London.
Since 2019, US investments in generative AI companies have amounted to 54 billion USD, compared to 3 billion USD in the next largest countries, China and the United Kingdom, according to Dealroom. These figures indicate that European investors are being outpaced by their US counterparts in this emerging technology sector.
Despite the challenges, Liautaud sees great opportunities in the development of AI applications that build on existing infrastructure. However, he warns that commercial adoption may progress more slowly than expected, but also sees the potential for rapid transformation in all sectors.
The European VC landscape has gained significant capital in recent years, but IPOs, which traditionally realize investments, have slowed down. "The bar has been raised enormously because there have been disappointments in the past," said Liautaud. Companies that could previously go public with USD 100 million in revenue now have to wait until they reach USD 300 to 400 million.
In conclusion, Suranga Chandratillake, Partner at Balderton and Board Member of Wayve, emphasized that acquisitions and smaller exits could increasingly gain importance, while the IPO will determine the fate of a major success.
